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Monthly Archives: February 2014

Commercial Real Estate Firms Trading Near 52-week Highs

In the stock market, CBRE and Jones Lang LaSalle (JLL) are trading near their 52-week highs. CBRE is up 4.3% since January 1 and JLL is up 18.3% despite the S & P 500 index being down for the year.

Commercial real estate firms are enjoying higher profits as the economic recovery boosts sales, leasing and development and investors believe that will continue as the recovery gains steam. In the U.S., sales of commercial real estate totaled $355 billion in 2013, up nearly 20% from the year before, according to Real Capital Analytics, a global data and analytics firm.

Commercial Real Estate Firms Trading Near 52-week Highs

In the stock market, CBRE and Jones Lang LaSalle (JLL) are trading near their 52-week highs. CBRE is up 4.3% since January 1 and JLL is up 18.3% despite the S & P 500 index being down for the year.

Commercial real estate firms are enjoying higher profits as the economic recovery boosts sales, leasing and development and investors believe that will continue as the recovery gains steam. In the U.S., sales of commercial real estate totaled $355 billion in 2013, up nearly 20% from the year before, according to Real Capital Analytics, a global data and analytics firm.

Nashville Office and Apartment Market Booming

Commercial real estate investors are also saying yes to Nashville, drawn by rising rents in the state capital and longtime hub of the country-music industry. Office and apartment sales in the area soared to records last year, combining for $1.7 billion in transactions and outperforming the U.S. average, according to global data and analytics firm Real Capital Analytics Inc.

Last year, Nashville office deals rose 50 percent and apartments gained 35 percent, compared with increases across the U.S. of 22 percent and 14 percent, respectively, said Dan Fasulo, managing director of New York-based Real Capital Analytics. “Any time you outpace the national, it’s significant,” he said. “Smart money is picking off the best assets in these mid-tier cities.”

Nashville Office and Apartment Market Booming

Commercial real estate investors are also saying yes to Nashville, drawn by rising rents in the state capital and longtime hub of the country-music industry. Office and apartment sales in the area soared to records last year, combining for $1.7 billion in transactions and outperforming the U.S. average, according to global data and analytics firm Real Capital Analytics Inc.

Last year, Nashville office deals rose 50 percent and apartments gained 35 percent, compared with increases across the U.S. of 22 percent and 14 percent, respectively, said Dan Fasulo, managing director of New York-based Real Capital Analytics. “Any time you outpace the national, it’s significant,” he said. “Smart money is picking off the best assets in these mid-tier cities.”

Transaction Volume of Multifamily Properties are Rising, Apartment Sales Falling

While transaction volumes for U.S. multifamily properties continue to be high and rising, apartment properties are not seeing the same trend in their price values, a phenomenon that has caused REITs to trade apartment properties as part of larger portfolios or through mergers. Sales of individual apartment properties fell in 2013, dropping 13% in Q4’13, according to data from global commercial research firm Real Capital Analytics (RCA).
“I think you’re going to see them becoming more neutral or even becoming net sellers,” says Dan Fasulo, Managing Director at RCA.
The top six markets for REIT apartment acquisitions in 2013 were Los Angeles, New York City, San Francisco, Boston and Seattle. Other top markets included secondary markets like Atlanta, Orlando, Dallas and San Diego.
Top apartment markets have largely fully recovered from the 2007 recession, causing them to produce less in yield than previously. Multifamily property prices were up 5% from peak levels in 2013, with property values in Manhattan now at record highs of 150%, according to the RCA Commercial Property Price Index (RCA CPPI).
Price values for other commercial property types, including office, industrial, retail and hotel properties, are still at least 10% below their peak levels. RCA CPPI index returns for apartment property types rose by 12% in 2013 at a much slower rate than the other property types. Average cap rates for apartments in 2013 also lagged behind other property types, at 6.2%; nevertheless, apartment cap rates rose by 4 bps.

Transaction Volume of Multifamily Properties are Rising, Apartment Sales Falling

While transaction volumes for U.S. multifamily properties continue to be high and rising, apartment properties are not seeing the same trend in their price values, a phenomenon that has caused REITs to trade apartment properties as part of larger portfolios or through mergers. Sales of individual apartment properties fell in 2013, dropping 13% in Q4’13, according to data from global commercial research firm Real Capital Analytics (RCA).
“I think you’re going to see them becoming more neutral or even becoming net sellers,” says Dan Fasulo, Managing Director at RCA.
The top six markets for REIT apartment acquisitions in 2013 were Los Angeles, New York City, San Francisco, Boston and Seattle. Other top markets included secondary markets like Atlanta, Orlando, Dallas and San Diego.
Top apartment markets have largely fully recovered from the 2007 recession, causing them to produce less in yield than previously. Multifamily property prices were up 5% from peak levels in 2013, with property values in Manhattan now at record highs of 150%, according to the RCA Commercial Property Price Index (RCA CPPI).
Price values for other commercial property types, including office, industrial, retail and hotel properties, are still at least 10% below their peak levels. RCA CPPI index returns for apartment property types rose by 12% in 2013 at a much slower rate than the other property types. Average cap rates for apartments in 2013 also lagged behind other property types, at 6.2%; nevertheless, apartment cap rates rose by 4 bps.

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